Customer Focus Is a Strategic Choice
Jan 24, 2019
By AMA Staff
The road to “Customer Focus Land” is paved with great intentions. As the AMA/HRI Magnifying Customer Focus survey indicates, respondents know what needs to be done. They are fully aware of the need for executive sponsorship, ongoing contact with customers and fast complaint resolution. But somehow, due to lack of time, budget or resources, the required actions are not executed at all or are not executed to the extent that they should be. The importance of the customer and the need to become a customer-centric organization is not disputed. The serious challenge is in the execution.
The Missing Ingredient
Why is it that these seemingly self-evident actions do not reach full execution? Why is it that despite a clear awareness of what needs to be done, companies aren’t making it happen? Why is it that despite their constant rhetoric about the need to become customer focused, companies do not actually execute?
The problem lies in one critical step that most executives and organizations skip or are not even aware of. At the core of the failure to become customer centric is the lack of a strategic choice to become a customer-centric organization. Most organizations treat customer centricity as an incremental shift where they merely add icing to the current strategic cake. It is perceived as a matter of simply smiling nicely and adjusting the overall attitude of the employees. A few T-shirts and motivational posters will do the trick. In reality, most companies require a more fundamental effort to become truly customer centric. They need to make a strategic choice.
The essence of strategic choice is accepting the need to make trade-offs. By making a choice to turn right, you make a choice not to turn left. Without trade-offs, the decision is not strategic and therefore is unlikely to be fully implemented and deliver meaningful results. Most organizations were built on a model of product or service centricity. These products and services were at the core of their businesses, and their ecosystems focused on managing the products and selling the same product to as many customers as possible, regardless of how different those customers were. The product-centric model was run on an efficiency methodology where one size fits all. The different ways customers interacted with the products or services were of little concern to the organization. Its main objective was to maximize its own revenues.
A Different Approach
A customer-focused approach runs the opposite course. It is fully focused on the customers and is geared to maximize revenues from customers rather than products. A customer-focused strategy delivers different services to different customers based on how unique the customers are. While product-centric organizations focus on selling the same products to as many customers as possible, customer-centric organizations focus on selling more products to the same customers. At the core of the customer-centric strategy is not efficiency but growth. The difference between the two strategies is the origin—the product versus the customer. Do we start with a product and find as many customers as we can for it? Or, do we start with the customer’s needs and find as many solutions as we can for that customer? This difference is not merely semantics. It is rooted in a different definition of value proposition, a different organizational structure, a different pricing model and different methods of connecting with the customers. Customer-centric companies do things completely differently – and not marginally differently, as is the case with product-centric companies.
Take a Stand
The overall results indicated in the AMA/HRI survey illustrate a nonstrategic approach to customer focus. Although respondents know what needs to be done, the results indicate that many organizations have not taken the stand to choose the strategic approach and make the leap.
Lip-service advertising about “loving the customers” and excessive customer surveys without meaningful change as follow-up are the wrong ways to approach customer centricity. These might be easy to implement, but they are not going to make your organization customer-centric. Such hollow efforts raise customers’ expectations without delivering anything tangible in terms of an improved customer experience. The economics of customer relationships are quite potent—and the financial justifications for making the leap to customer centricity quite powerful. To support making that leap, executives need to benchmark and assess the costs and financial benefits of becoming customer centric (as opposed to remaining product/service centric) and then prepare to make the strategic decision.
The road to customer focus is paved with great intentions. But only those who have made the strategic choice, fully recognizing and accepting the trade-offs, will be able to embrace the new strategic direction and maximize its financial potential.
About The Author
American Management Association is a world leader in professional development, advancing the skills of individuals to drive business success. AMA’s approach to improving performance combines experiential learning—“learning through doing”—with opportunities for ongoing professional growth at every step of one’s career journey. AMA supports the goals of individuals and organizations through a complete range of products and services, including seminars, Webcasts and podcasts, conferences, corporate and government solutions, business books and research.